Bison Company Reported Sales Revenue for 2013 of $900,000

question 126

Multiple Choice

Bison Company reported sales revenue for 2013 of $900,000. The products were sold with a nine-month warranty. Members of Bison's management estimate the cost of the warranty will be equal to 5% of sales revenue. Which of the following will be included in the entry to record the actual amounts paid out as a result of warranty claims?

• A)a debit to Estimated Warranty Payable for the actual amount of payments
• B)a credit to Estimated Warranty Payable for $45,000
• C)a debit to Estimated Warranty Payable for $45,000
• D)a debit to Warranty Expense for the actual amount of payments

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Definitions:

Innovation

The act of converting a concept or innovation into a product or service that adds value or is something consumers are willing to purchase.

New Idea

An original concept, thought, or innovation that has not been previously considered or implemented.

Lack of Information

A situation where insufficient or no data is available to make informed decisions or understand a situation fully.

Disruptive Innovation

Innovation that creates products or services that become so widely used that they largely replace prior practices and competitors.